MANILA, Philippines — The Department of Budget and Management (DBM) has recently issued new guidelines to streamline the settlement of account payables of national government agencies (NGAs), thereby reducing their outstanding checks for better cash management by the Bureau of the Treasury (BTr).
Budget Secretary Benjamin Diokno issued DBM Circular Letter 2018-14, dated Dec. 28, 2018, updating CL 2013-16 which provides guidelines on the use of the modified direct payment scheme (MDPS) for settlement of account payables due to creditors and payees.
Under the new rules, NGAs are mandated to pay using the advice to debit account (ADA) to all their creditors or suppliers. These payees are advised to open accounts with government servicing banks (GSBs) wherein the agency concerned has an account.
The updated guidelines also clarified procedures regarding issuance of checks to small creditors and other creditors who cannot be conveniently paid using the ADA.
Payees were instructed to issue a remittance advise to GSBs to transfer the concerned agency’s payment to their accounts outside of the GSB.
According to the DBM, the official receipt, sales invoice or validated list of due and demandable accounts payable- advice to debit accounts (LDDAP-ADA) shall form part of the disbursement voucher as proof of payment.
The new circular also streamlined the preparation of the LDDAP-ADA, as well as the Invalidated ADA entries for efficiency.
It required GSBs to credit the supplier or creditor’s account within two banking days upon receipt of the LDDAP-ADA from the concerned agency, except for payroll, which shall be credited on the same day as the ADA was issued.
Data from the BTr showed that there are still P22.7 billion worth of outstanding checks issued by NGAs as of June 29, 2018.
Meanwhile, DBM data showed that government disbursements in the first 11 months of 2018 rose 24.2 percent to P3.095 trillion from P2.49 trillion in the same period the previous year.
Starting 2019, the DBM is pushing for the institutionalization of an annual cash-based budget, shifting from the current two-year obligation-based appropriations system.